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Brexit Update – Corbyn Looks to Block a No-Deal Brexit

Bob Mason

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The Pound found strong support on Thursday as Brexit chatter and better than expected retail sales figures delivered a boost.

The Pound had returned to sub-$1.21 levels, in response to 2nd quarter GDP numbers that came amidst the lingering threat of a no-deal Brexit.

The news hit the wires on Thursday of Labour Party leader Jeremy Corbyn plans to block a no-deal Brexit. Corbyn’s plan is to prevent a no-deal Brexit by becoming caretaker Prime Minister ahead of 31st October’s Brexit date.

The announcement came in spite of the UK Parliament’s summer recess and certainly makes the 3rd September an interesting day.

Corbyn has been busy over the summer looking for a way to oust newly appointed Prime Minister Boris Johnson. Johnson’s removal from the top job would ease the prospects of a no-deal departure from the EU. His removal may also pave the way for talks to resume with the EU and possibly raise the chances of a 2nd EU referendum.

What Lies Ahead

While the UK Parliament has just over 2-weeks left before the end of its summer recess, the political wrangling has begun in earnest.

Members of Parliament and political party leaders responded to Corbyn’s plan to avert a no-deal Brexit by ousting Boris Johnson. It is far from a done deal…

Perhaps unsurprisingly, there was support from Tory Party rebels who remain pro-remainers and also remain as members of the Tory Party.

The very fact that members of the Conservative Party are willing to consider supporting a Labour Party caretaker government illustrates just how broken British politics is today.

Also siding with the Labour Party leader were the SNP and Plaid Cymru, both of whom continue to favor a no-Brexit outcome.

One hurdle for Corbyn, however, is a lack of support from Liberal Democratic leader Jo Swinson. There are also the hard-line Brexiteers and fence-sitters to factor in…

Interestingly, the Liberal Democratic leader was not against the idea of a Labour Party caretaker government. Swinson was merely against the idea of a Corbyn led caretaker government.

Swinson’s comments add to the anticipation of Parliament’s first day after the summer break.

The big question is whether Labour Party leader Corbyn is willing to fall on his sword to avert a no-deal. Time will tell if this is a last-ditch attempt at becoming Prime Minister?

Swinson opens the door for anti-Corbyn Labour Party members to push for a new Party leader. At a minimum, any replacement will need to garner the necessary support to oust the Tories.

There’s very little time left until Halloween.  Therefore, we can expect plenty of activity in the lead up to September 3rd

The Pound

Unsurprisingly, the Pound found support as the news hit the wires. Any glimmer of a hope that a no-deal Brexit can be avoided continues to be Pound positive.

In spite of the talk of a vote of no-confidence, there’s a long way to go before Corbyn can call for such a vote with confidence…

Political party lines are broken as a result of the material differences in view on Brexit. Corbyn will need to find cross-party support. And plenty of it.

The UK Parliament’s failings at finding a Brexit blueprint to satisfy a majority suggests that Corbyn’s plan may well fail.

For the Pound, any hint of increasing support for the Labour Party and expect further upside. So, expect the Pound to be at the mercy of the news wires ahead of 3rd September.

At the time of writing, the Pound was up by 0.02% to $1.20827.

This article was originally posted on FX Empire

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